Metro's existing waste-to-energy plant in south Burnaby was built as a design-build-operate P3 but a new incinerator could be developed with a private financing role as well. Photos below: Delta Mayor Lois Jackson

Metro starts down P3 road for new waste incinerator

Metro Vancouver’s proposed waste-to-energy project may end up being privately financed if the regional district’s application to Ottawa for federal funding as a private-public partnership is approved.

The application for P3 Canada funding has split directors on the regional board, with some warning that building a new incinerator as a P3 could dramatically drive up the costs for taxpayers.

Delta Mayor Lois Jackson said the situation is reminiscent of the Canada Line, where private investors borrowed the money to build the $2-billion rapid transit line at much higher interest rates than if it had been publicly financed.

She noted the region gets favourable interest rates through its membership in the Municipal Finance Authority.

“I have no problem with doing a P3 for design-build,” Jackson said. “But finance I think is not a wise choice. All that money and interest has to be paid back and the taxpayer ends up paying back a higher rate of interest.”

P3 Canada-eligible projects must give the private partner not just a design-build role but also one of either operating, maintaining or financing it.

Metro’s application proposes a design-build-finance-operate P3, because projects with the most private sector involvement are expected to be preferred for funding.

Board vice-chair Richard Walton supported the decision, saying Metro won’t yet be bound to that model and could revise it later.

Metro staff and consultants are still determining a recommended business model for the new plant ahead of a call for proposals from potential partners.

But Walton said the region had to apply by June 15 to have a shot at a grant.

“My view is you keep all those doors open going forward,” he said.

The P3 Canada fund is to distribute more than $525 million by the end of 2013, with grants limited to 25 per cent of a project’s capital cost.

Metro’s current waste-to-energy plant in south Burnaby was developed as a design-build-operate P3, with the region financing it and retaining ownership.

Metro Vancouver still must carry out extensive studies and consultation with the Fraser Valley Regional District, where there are concerns a new incinerator would worsen air quality in the constrained airshed.

Metro is also far from deciding where a new waste-to-energy plant might be built and whether it uses conventional incineration or some alternative technology.

The region downsized the plan earlier this year, estimating it now needs extra disposal capacity of 250,000 to 400,000 tonnes per year – down from 500,000 to 600,000 – in light of declining garbage volumes.

The Metro application will have at least one more local competitor for the same pool of federal money.

The City of Surrey is also applying to the P3 Canada fund to help finance an organic biofuels plant it plans to build to serve the region at Metro’s Port Kells transfer station.